Govt clears big Chinese loan to build elevated expressway

The government has approved a US$796 million loan from China Development Bank (CDB) for building the Dhaka Elevated Expressway (DEE) to help ease the traffic troubles on the city roads, officials said.
Work on the long-delayed project may start in coming December.     
"The loan has been approved," a senior official, familiar with foreign loans and supplier's credit-approval process, told the FE Wednesday.
The loan was okayed at a meeting of the scrutiny committee for approval of foreign loans or supplier's credits, held in the central bank headquarters in Dhaka Monday. Committee chairman and Bangladesh Bank Governor Dr Atiur Rahman presided.
"The interest rate on the loan has been fixed at six-month LIBOR (London Inter-bank Offered Rate) plus 4.50 per cent," the official said.
The effective interest rate will be below 5.0 per cent on the 15-year-term foreign-currency loan.
Under the existing provisions, a contract will be signed between the China Development Bank and the Italian-Thai Development PLC, the concessionaire of the project.
The Italian-Thai Development PLC has formed a company locally, named, the First Dhaka Elevated Expressway Company Ltd that has already been registered with the Registrar of Joint Stock Companies and Firms and the Board of Investment.
Disbursement of the loan will start after the signing of the contract, according to the official.
"We expect that such loan will help in implementation of the DEE, the country's first Public-Private Partnership (PPP) project in road- infrastructure sector," another official said.
Quoting loan proposal, the official also said implementation process of the US$1.25 billion project will be started from December this year.
Three local banks -- Sonali Bank, BRAC Bank and Modhumati Bank -- have also expressed their willingness to invest a total of Tk 10 billion for implementation of the DEE project.
"We're interested to invest in the PPP project if the government provides grantee against the loan," Mizanur Rahman, managing director and chief executive officer (CEO) of the Modhumati Bank, told the FE.
He also said the commercial banks also sought policy guidelines from the central bank in this connection.
Bangladesh Bridges Authority (BBA) and the Italian-Thai Development PLC signed an agreement for the second time on December 13, 2013 after the first agreement struck in January 2011 became obsolete due to change of the project's alignment.
The government had set targets to start construction of the 26-kilometre expressway since its initiation on various occasions, but it could not do so for reasons like failure to hand over land to the concessionaire and the failure of the private sector partner to mobilise funds.
"We expect that the land for the expressway route from Hazrat Shahjalal International Airport to Banani will be handed over to the concessionaire by July this year," Kabir Ahmed, Chief Engineer of the BBA, told the FE.
The DEE would be constructed from Hazrat Shahjalal International Airport to Shanir Akhra on the Dhaka-Chittagong highway with five connecting points to pick and drop traffic.
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